Twenty law students from the University of Alabama School of Law spent a week in the Cayman Islands as part of their studies to gain insight into the offshore financial services offered here. It is the eighth year that Professor Andrew Morriss has brought a class of students to the Cayman Islands, but this year for the first time with the University of Alabama.
The three-day course ‘Special problems in corporate law: Offshore financial transactions’ was based on an agenda representing a cross-section of Cayman’s financial services industry.
“Cayman offers students the opportunity to learn about international business that can’t be equaled anywhere else – our students are able to hear from professionals and government regulators,” Professor Morriss said.
Speakers at the course included representatives from local firms Stuarts Walker Hearsant, Maples and Calder, BDO, Highwater, AON, Walkers, Butterfield and Liberty Consulting, as well as the Cayman Islands Monetary Authority, the Tax Information Authority, the University College of the Cayman Islands and the Cayman Islands Law School.
Several of the participating students are already practicing and said they could see real practical application in the course. Don Matthis, a CPA and MBA, said he had helped set up a fund of funds and noticed a lot of hedge funds and some of the private equity funds the fund was investing in were actually organised in Cayman.
“So I wanted to dig a little deeper to find out why they are here,” he said.
In addition, the opportunities for self insurance through captive insurance companies were interesting and he wanted to learn about Cayman’s advantages for captives, for example compared with Vermont, he explained.
Matt Henshaw, who will be graduating in May, said he was interested in the financing structures used in Grand Cayman.
The main benefit of the course, students noted, was the opportunity to network and establish contacts with Cayman Islands financial services professionals.
“You can do a year long programme just on the financial services that are offered here, but the big thing is issue spotting and getting in contact with somebody who knows the issue inside and out,” said David Doughty, a state tax adviser with Pfizer.
As part of the course, former Maples and Calder senior partner Tim Ridley offered his view regarding the future of offshore financial centres. Mr. Ridley presented three possible scenarios, of which the most likely would see those OFCs flourish that can demonstrate they genuinely add value to international transactions. Those that do not would struggle amid the multiple challenges that OFCs are facing, including regulatory pressure and reputational issues, he said.
Students agreed that US media coverage does not necessarily portray the Cayman Islands in a positive light.
Mr. Henshaw said, “My impression was that it is a great tool for US businesses, but there is also a lot of sketchy stuff happening. Coming down here you see how strict the regulation is, how tight the laws are. It was a real eye opener.”
Despite Cayman’s size as a financial centre, he said, it was fascinating to see that it was still small enough for regulators and banks to know their customers well.
The level of regulation seems in fact so high that one might argue regulators have overreacted, Mr. Matthis said.